The formation of lakes as glaciers retreat can potentially influence stream temperature and enhance catchment water losses via evaporation. This study quantified the summer water and energy budgets and thermal regime of an ice‐contact proglacial lake below Bridge Glacier, British Columbia, to link ongoing glacier retreat with downstream effects. The ice‐proximal and distal portions of the lake behave differently due to a mid‐lake recessional moraine, against which icebergs are pinned by the dominant katabatic wind. Iceberg cover of the ice‐proximal basin ranged from 16% to 75%. Temperature profiles in the ice‐proximal basin were dominantly near‐isothermal at 1 to 1.4°C, with the exception of diurnal warming of the top 1 m of water and the presence of a colder layer near the lake bed at some sites, presumably caused by subglacial discharge of turbid water. Subaqueous iceberg melt limited warming by consuming heat from the water column. The distal basin exhibited varying degrees of thermal stratification, with turbidity inferred to have a greater influence on water density than temperature. Most of the warming between lake inflow and outflow occurred in the distal basin, where net radiation was the dominant surface energy input and net lateral advection the dominant energy sink. As a result of the suppressed water temperature, humidity gradients over the lake favoured condensation, not evaporation. Estimates of iceberg melt volume for 2013 exceeded glacier discharge into the lake. Therefore, when the glacier eventually becomes land‐terminating, icebergs are expected to disappear within a year, resulting in higher water temperatures both in the lake and downstream. Higher lake temperatures could also cause an eventual shift from condensation to evaporation, which would tend to reduce catchment water yield over and above reductions associated with loss of glacier area.